On 22 June, the government announced that it was consulting on widening the eligibility criteria for energy intensive industries scheme (EIIs) to be made exempt from the indirect costs of renewable support schemes.

These include the Renewable Obligation (RO), the Feed-in Tariff (FiT) and Contracts for Difference (CfD) schemes.

BEIS called for evidence of current intra-sectoral competitive distortions as a result of the current costs some EIIs face from these support schemes as a result of the current exemption level of 20% electricity intensity.

Dependent on this evidence, the consultation is also seeking views on lowering the intensity threshold to 17%, 15% or 10%.

Lower The Energy Intensive Industries Scheme Threshold

It was noted that while lowering the threshold would exempt more Energy Intensive Industries Scheme from in direct renewable policy costs, it would also increase electricity costs for non-eligible consumers.

To address this, BEIS proposed three options to reduce aid intensity (the amount of exemption that a company receives) for EIIs with lower levels of electricity intensity to: 50% for businesses with electricity intensity at or above 17% and below 20%; 50% for businesses with electricity intensity at or above 15% and below 20%; or 35% for businesses with electricity intensity at or above 10% and below 15%. Under all of these scenarios the aid intensity would remain at 85% for businesses with electricity intensity at or above 20%.

Spreading the costs

In one option (see table) BEIS expects any newly exempt EIIs to see their electricity costs fall by up to 50% of the RO, FiT and CfD policy costs. This would result in electricity bills falling by an estimated average o